Results from the recent UK spectrum auction and the minimum price set by the Korean regulator show record 3.5 GHz spectrum valuation.
UK operators paid £1.16 Billion ($1.64 Billion) for 150 MHz. In Korea, the regulator asked for close to $2.5 Billion for 280 MHz.
For comparison, the 3.5 GHz UK spectrum is more than 5x the price paid in Spain and more 3x the price paid in Ireland, two years ago. It is also more than 39x the price paid in the UK in 2003!
On the other hand, the 3.5 GHz spectrum is 29x cheaper than the average value of 700 MHz spectrum.
Spectrum valuation trends
Korea plans to auction the 3.5 GHz spectrum in mid-June together with 28 GHz spectrum. The regulator is attempting to leverage channel bandwidth to increase the stakes for the carriers and increase the price of the spectrum. I doubt there wiIl be significant premium given the local dynamics and operator financials.
Traditionally, the 3.5 GHz band suffered from a weak ecosystem that limited availability of both infrastructure equipment and user devices. Japan licensed this band a few years ago, but deployments did not follow. 5G promises to change that, but it will still require a market driver with significant weight to pull in demand. China is one potential driver with spectrum consultations under way.
One of the areas we at Xona Partners are evaluating is to what extent the features of 5G will reduce network deployment costs. There are technical shortcomings in LTE that limit the service range. 5G promises to fix these issues. To what extent does 5G improve the cost-benefit equation?
Updates to come!